Crypto Exchange Bitmex’s Founders Plead Guilty to Bank Secrecy Act Violations – Regulation Bitcoin News

Arthur Hayes (founder of Bitmex), and Benjamin Delo (the CEO) pleaded guilty for violating the U.S. Bank Secrecy Act. “As a result of its willful failure to implement AML and KYC programs, Bitmex was in effect a money-laundering platform,” said the U.S. Department of Justice.

Bitmex’s Founders Guilty of Bank Secrecy Act Violations

U.S. Department of Justice (DOJ), announced Thursday that Bitmex’s founders have pled guilty for violating Bank Secrecy Law (BSA). The DOJ said:

Bitmex was designed by Benjamin Delo, Arthur Hayes, and Benjamin Delo to be a showcase for U.S. Anti-Money Laundering Rules.

Hayes is 36 years old and hails from Miami, Florida. Delo (38), resides in Hong Kong and the U.K.

The Justice Department explained that from at least September 2015 through the time of their indictment in September 2020, the two “willfully caused Bitmex to fail to establish and maintain an AML program,” including a know-your-customer (KYC) program. After the indictment, Hayes was removed as Bitmex’s CEO.

The DOJ stated that Hayes received notification in May 2018 about allegations that Bitmex had been used to launder proceeds from a crypto-hack. But, Hayes and Delo did not file suspicious activity reports afterward or implement any preventative measures that would have prevented future misuse of Bitmex to launder money.

Detail:

Bitmex, due to its failures to implement AML/KYC programs was effectively a money laundering platform.

Bitmex was also used to evade sanctions, the DOJ noted, adding that both Hayes and Delo communicated directly with the exchange’s customers “who self-identified as being based in Iran, an OFAC-sanctioned jurisdiction, but did nothing to implement an AML or KYC program after doing so.”

Furthermore, the crypto platform never ceased operations in the U.S. “Despite repeatedly stating that Bitmex did not serve U.S. customers.” the DOJ said:

Hayes and Delo both knew that Bitmex’s purported withdrawal from the U.S. market in or about September 2015 was a sham.

The “purported ‘controls’ Bitmex put in place to prevent U.S. trading were an ineffective facade that did not, in fact, prevent users from accessing or trading on Bitmex from the United States,” the DOJ described.

Hayes and Delo also used U.S.-based crypto “influencers” to market Bitmex’s products to new U.S. customers through the platform’s “affiliate program,” the Justice Department noted.

Both founders plead guilty to violating the Bank Secrecy act. This law carries a maximum sentence of five years imprisonment. The DOJ added:

According to their plea agreements, Hayes & Delo agreed to pay $10 million each for the criminal offense.

Bitmex paid $100 million in August to resolve charges against the U.S. Commodity Futures Trading Commission, (CFTC), and the Financial Crimes Enforcement Network. In January this year, the exchange acquired a German bank with the aim to create a “regulated crypto powerhouse” in Europe.

What do you think about Bitmex’s founders pleading guilty to violating the Bank Secrecy Act? Please comment below.

Kevin Helms

Kevin is a graduate of Austrian Economics. He discovered Bitcoin in 2011, and has been an advocate ever since. His main interests are in Bitcoin security, open source systems, network effects, cryptography, and intersections between economics, cryptography, and Cryptography.